A Gastonia attorney who acknowledged he mishandled client funds will now lose his license to practice law.

Reid C. James, who practices general trial law from his office at 125 E. Main Ave., was scheduled to appear before the State Bar’s Disciplinary Hearing Commission for a trial on Friday. The State Bar made several complaints against James in the past year and a half, including that he took client funds that were to be held in trust and instead used them for personal or business expenses without authorization.

James said in March he had done nothing wrong and would represent himself in contesting the charges. But on Friday, he waived his right to the formal hearing, acknowledged guilt and agreed to the commission’s discipline.

That punishment will involve his law license being suspended for five years. The suspension will take effect within 30 days of the order, which will allow James to resolve existing cases or refer clients to other attorneys who can continue to represent them.

James was also ordered to pay the costs and administrative fees of the commission proceeding. In three years, he will be able to seek a stay of the remaining two years of his suspension, though he will have to fulfill numerous requirements for that to be granted.

James was admitted to the State Bar in 1982. He could not be reached for comment this week.

A disregard for responsibilities

The State Bar’s complaint stemmed from a random audit in February 2012, which uncovered financial irregularities dating to 2006. It maintained James “committed a criminal act that reflects adversely on his honesty, trustworthiness or fitness as a lawyer.” It also stated that he “engaged in conduct involving dishonesty, fraud, deceit or misrepresentation.”

The State Bar requires attorneys to keep their own money apart from client money, which is to be held in a trust. They are expected to keep appropriate records and prove they are upholding bookkeeping requirements, to leave no room for doubt about what money is going where.

James’ most egregious misstep came in June 2008, when he received $17,250 in entrusted funds to hold for a client. The money was tied to a business transaction between the client and a third party.

Instead of depositing the money into his attorney trust account, James put it into his operating account. When it was time for him to return the entire $17,250 to the client in July 2008, James returned only $7,000, the State Bar found.

James did not provide the client with the full balance of the entrusted funds until April 2009.

The commission noted that James likely didn’t intend to harm his clients. But it stated his “conduct has the potential to cause significant harm to the standing of the profession in the eyes of the public because it shows his disregard for his duties as an attorney.”

Page 2 of 2 - Katherine Jean, general counsel for the State Bar, declined to comment specifically on James’ case. But she said the commission takes the accounting requirements seriously.

“At the end of the day, this is all about protecting the public,” she said.

You can reach Michael Barrett at 704-869-1826 or twitter.com/GazetteMike.